Dynamic Pricing – A How To Guide

If you’re here you’re probably wondering how to implement dynamic pricing – and better yet, how to do it without sacrificing customers or margins. Well, you’ve come to the right place, because that’s precisely what this blog is about.

Dynamic pricing has taken the online retail market by storm, with Amazon still the reigning champion. That’s because they can afford to drop their prices to basically nothing. However, if you’re a retailer has the data to use the strategy but can’t compete with low prices, there are other ways you be competitive.


With dynamic pricing it’s difficult to find some middle ground. You’re either having to undercut your competitors and decrease your margins, or you have to increase prices which ultimately irritates customers. So here are our top 3 steps to help you use dynamic pricing to your advantage.

Step 1 – Use Competitive, Clean Data

Your dynamic pricing strategy needs to start with great competitor data. Collecting it helps you establish the boundaries of your pricing, but unfortunately, it’s not always accurate. Incorrect or missing data can cause some frustrating issues with your pricing, whether that’s item prices being mixed up, or simply the data itself being filled in incorrectly – many things can go wrong.


If it makes you feel better, 64% of retailers don’t actually have a properly defined pricing strategy according to WIPRO. That doesn’t mean it’s okay to be one of them, but know you’re not alone! The key to you nailing this is having a savvy business analyst to help you out. They’ll be able to keep your data clean and accurate. The best business analysts can collect and sort mass amounts of data, feeding all the pure data to algorithms for optimisation.

Step 2 – Testing Your Prices

Once you’ve got that squeaky clean data, you can start testing your pricing. Getting your pricing right depends on several factors such as brand value, price elasticity, competitor pricing and shipping costs. You can test your pricing in the same ways you can test your UX. Utilising A/B testing on your pricing strategies you can start to understand the best way to boost conversion rates, sales revenue and your bottom line. Using a data driven price strategy will help you make far better informed decisions.

Step 3 – Dynamic Not Discriminatory



We’ve found that some retailers base their dynamic pricing on demographic or device. For example, a person who is browsing products on a mobile device will have products shown at a lower price compared to someone that’s on a PC. Similarly, prices will fluctuate based on how far away they are from a high street store. It’s not only wrong to do this, but it can also be illegal. Not to mention that if your customer notices, they won’t come back on principle. It’s getting back to basics – your market determines your price.

The increasing number of retailers using dynamic pricing is a good thing. Finally smaller businesses can compete with giants like Amazon, with methods and tools becoming cost effective. It’ll take you a lot of work, but by following what we stated above it can help you grow to be as competitive as the major retailers without sacrificing what matters.

Source: Hubspot

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Alice Page

Digital Project Manager

Digital project manager, Alice smashes PPC campaigns and getting the developers into gear...